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US Tariffs Erode Competitiveness of Indian Auto and Tire Exports
2 Aug
Summary
- 25% US tariff on Indian exports puts domestic industries at disadvantage
- Indian exporters face higher duties compared to Asian peers
- Tyre and auto component sectors heavily impacted, need to diversify markets
As of August 2, 2025, the US administration has announced the imposition of a 25% tariff on all goods coming from India, effective from August 7. This move has raised concerns across India's automotive and tyre industries, both of which maintain substantial export exposure to the US market.
The US currently accounts for 27% of India's auto component exports and 17% of tyre exports. The tariff hike places Indian manufacturers at a disadvantage compared to their Asian peers, such as Japan, Vietnam, and Indonesia, which face lower or preferential duties. This could dent the competitiveness of Indian suppliers, especially in the off-highway and replacement tyre segments, as well as across various automotive components.
While Indian tyre exporters previously enjoyed a modest advantage over Chinese competitors, that edge may now be offset by the lower tariff rates granted to other Southeast Asian nations. Auto component exporters, particularly those heavily reliant on the US market, are expected to diversify their geographies and improve cost efficiencies to lessen the impact.
The auto components industry reported a turnover of $80.2 billion (₹6.73 lakh crore) for the fiscal year 2025, a growth of around 10% compared to the previous year. Exports of auto components grew by 8% to $22.9 billion (₹1,92,346 crore) in FY25 from $21.2 billion (₹1,75,960 crore) in FY24. However, the imposition of the 25% US tariff is likely to pose a significant challenge to the industry's continued growth and competitiveness in the global market.
